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If you like Milton Friedman's story, you might also like:
Gary Becker,
George H.W. Bush,
Paul H. Nitze,
John Sexton
and Lech Walesa

Milton Friedman's recommended reading: The Scarlet Plague

Related Links:
Hoover Institution

Milton and Rose D. Friedman Foundation

Nobel Prize

History of Economic Thought

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Milton Friedman
 
Milton Friedman
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Milton Friedman Interview (page: 4 / 7)

Nobel Prize in Economics

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  Milton Friedman

So you're saying that one must be wary of making a career out of ideology because you become all values and no facts.


Milton Friedman: That's right. Partly [it's] that and partly it is very much dependent on the kind of sources of income that you don't want to become dependent on, because you will find you have special rituals of courtship as long as your ideological preconception meets their special interests. But, they won't have anything to do with you, if it doesn't. And therefore, if you try to make your living that way, you will always have to come up against the situation where you have to decide whether you're going to sacrifice your principles in order to be able to get the money you need in order to achieve something else. That is to say, well, maybe I'll bend a little in this direction because that way I'll be able to push my other idea.


It's not a healthy way, it's not a good life. In my opinion, if you work, if you get some kind of a solid base, I don't care whether it's -- I'm going to say it should be intellectual -- go into business, but get yourself an independent base so that you can really be truly consistent and stick to your principles so you don't have to modify them in order to satisfy somebody else.


People don't realize how hard it is to have truly free speech. Very few people in the United States are in a position where they can express what they really believe freely and without inhibition. No head of businesses, almost no head of a business, very few, because if one way or another the ideas that they express are going to offend some source of income for their firm, they're in trouble. I can give you some very simple examples. During the 1950s, '40s and since, the U.S. has been issuing savings bonds. There's been a great deal of propaganda to buy savings bond. For much of that period though, that was the biggest bucket shop operation in history, because the government was issuing savings bonds, which when they were redeemed, would enable you to buy less than the initial price when you purchased. You paid $100.00 for a savings bond and got 3 or 4 percent interest, but the inflation rate was 5 or 6 or 7 percent. When you got back $125.00, $150.00 at the end of the period, it would buy less than the $100.00 did at the beginning. You were paying for the privilege of saving. It was a bucket shop operation. It was a disgraceful operation, I think. And it should never have been engaged in. During much of that period every bank in the United States in sending your monthly statement to its depositor would include a brochure advertising the virtues of saving bonds as a way of saving for your future. I have talked -- at that time I talked to many bankers, and I said, "Tell me, do you buy savings bonds for yourself?" Of course not. "Do you really consider them a good investment?" No, they're a terrible investment. "Why do you put these brochures in your slip?" Because the Treasury wouldn't like it if we didn't.


Again, they formed committees, a savings bond committee that had big advertisements in the paper with pictures and all of these great people on it advising people to buy savings bonds. Nine out of 10 of those people knew that they were giving very bad advice.

And they were all doing it because it was very important for them to be in the good graces of the Treasury or whoever else.

Now let me give you a very different example.

I would just add one thing there. This was not always in war time?

Milton Friedman: Oh, no, not in war time at all. In peace time, in peace time. Oh, no.

Let me give you a very different example, and it wasn't at wartime at all. We're heading toward socialized medicine. You're a professor at a medical school. Your medical school is receiving two-thirds of its income from the U.S. government. You believed that you ought to have strictly private medicine. Would it be easy for you to get up and say that?

Not at all. It would be very, very difficult.


I've often said that the only people who have real, honest to God freedom of speech are tenured professors on the verge of retirement or who have already retired and have an independent income like myself. [Laughter] But I think one of the most precious things in life is to be able to say what you believe freely and openly without having to worry too much about the consequences--I say too much. I don't believe that it ought to cost less. If you're going to say unpopular things and you're going to become unpopular as a result, that's going to impose a cost. And sometimes maybe you won't be willing to bear it. But, there ought to be no so-to-speak artificial costs, artificial limitations on you. But yet, there are on most people. I can give one example after another of the same kind of thing. Right you have this terrible situation that's happening in college after college in this country of a complete intolerance for speech which is not quote, "politically correct." It's come to be a new term that's used, "politically correct speech." It's a terrible term. It's a disgraceful term. Correct speech ought to be speech which expresses what a person believes, what he thinks to be the truth. And it's a disgrace that in universities of all places there should be the kind of censorship that is in fact being imposed.


Even if that speech expresses racial or ethnic hatred?

Milton Friedman: Absolutely.

Now again, I don't blame people for being angry at such speech. And if you're going to express it, you ought to be willing to bear that kind of anger, absolutely.

But you shouldn't be prevented from expressing it?

Milton Friedman: You shouldn't be prevented from expressing it.


What's important is not only freedom to speak but freedom to listen. I don't think freedom of speech, speak, includes being subsidized by anybody. I don't believe it includes freedom to use government facilities like a hall to give a speech. What it includes is, on the one hand, the right to hire a hall, say what you want, and second, and most important -- not for the speaker, but for everybody else -- the right of everybody else to listen, to hear what they want to hear. And what's happening now is not so much restriction on freedom of speech, but a restriction on freedom to listen. If a professor says something in a course that other people don't like, they come in and disrupt the course so that nobody can listen to them. The people who want to hear them can't hear them. And I think that's absolutely disgraceful. In fact, I think the most important single virtue, human virtue, is tolerance. And tolerance grows out of humility. If you really know the answers, if you really believe that you have the truth, THE truth, the ultimate truth, how can you tolerate it? How could you let anybody sin if you really know what sinning is? Can you let them sin? No. So the source of tolerance is the recognition that none of us has the truth.


We may have very strong feelings. We may have very strong beliefs, but we always have to recognize the possibility -- I like to quote a statement that Oliver Cromwell made, which he didn't believe, but he states it very well even though he doesn't believe it.

"Now the bowels of Christ," he said, "I beseech you, we think you may be mistaken."

And that's what's important. Each of us has to believe, I'm pretty damn sure I'm right, pretty sure I'm right. But there is a chance that I may be wrong because the other fellow also thinks he's right. And who am I say that some how or other the views he holds are less good than the views I hold?

So I want to be free to try to persuade him of my view. He ought to be free to persuade me of his view. But neither of us have the right to coerce the other through physical intimidation.

To put a slightly different tact on Oliver Cromwell, I think the wisdom from Uncle Remus was, it's not what you don't know that hurts you, it's what you know for sure that ain't so.

Milton Friedman: That's right. Very good.

Uncle Remus--you know there are many other sources of that saying. My favorite one has been a 19th century humorist--a very famous one--his name will come to me. He's the one who said that the Supreme Court follows the elections -- wrote in an Irish brogue. And he made exactly that statement, the same as Uncle Remus. It ain't ignorance that's the problem, it's what we know that ain't so. And that's exactly the same as Uncle Remus.

Speaking of public policy, you're known for a laissez faire philosophy towards government intervention in the economy. Do you think if Congress gets its hands off, business will be able to operate more freely and more profitably?


Milton Friedman: First of all, the aim is not to have business operate more profitably. The aim of our society is to have people better off. Profits are a means, not an end. In a good society, it's very hard to make profits, because you've got a lot of competition, you've got a lot of people trying to participate. We do. But as far as Congress is concerned, at the moment (1991) we are roughly 50 percent socialist. Government spending at all levels is now 43 percent of the national income. In addition, the government imposes regulations and rules on business that clearly take up another 10 percent or so of our income. So more than 50 percent of our resources are now being distributed and allocated by government. The best thing government could do, in my opinion, in order to promote the well-being of the consumers -- which indeed would give more opportunity for entrepreneurs to get into business and to open up new businesses -- the best thing government could do would be to cut its size. We have a great deal of downsizing by enterprises now, what we really need is downsizing by government. One more point: if you look at our real social problems -- not our economic problems, but our social problems -- almost all of them have been produced by government. One of our major problems, which has been mentioned, is that our school system is unsatisfactory. Why? Because in the main, it's a government monopoly. The private schools, on the whole, do a very much better job than government schools. Just as socialism in general does a poorer job than private enterprise.


Why is that? People who advocate new public programs start out with great intentions, don't they? What do you think goes sour in the process of carrying them out?


Milton Friedman: What goes bad is that nobody spends somebody else's money as carefully as he spends his own. That's fundamentally what goes bad. It isn't that people are bad. The same people, on the one hand, spending their own money, and on the other hand, spending somebody else's money, will behave very differently. What goes bad is that - people are sincere. The people who run the school system want to do a good job, they aren't bad people. It's not that at all - but they have no competition. They don't have to prove themselves. And therefore, they tend to stress their own errors. In the case of the school system, a major problem is the extent of influence of the teacher's unions. The National Education Association is the largest pressure group in the country. It has an annual income of $750 million, and it doesn't hesitate to spend that to try to promote its own interests. In fact, it's perfectly open and above-board that its purpose is not to promote education, its purpose is to promote the well-being of its members. And I don't blame them for that, that's what they're there for. But if you ask what goes wrong, in my opinion, that's what goes wrong.


Most people are receptive to the free market argument as it applies to most goods and services, but when it comes to something like health care, they may argue that free market principles don't really apply. Do you think that there are areas like health care where we may need more government action rather than less?

Milton Friedman Interview Photo
Milton Friedman: I differ completely with them on health care. Free market principles apply. The reason we have a health care crisis is because we're not following free market principles. Why in the world should you buy your health at the company store? The company store is an old anachronism which people try to avoid. The only reason we get our health through our employers is because there's a tax gimmick under which, if the employer pays for it, the employee doesn't have to pay tax on it. Whereas, if he pays for it himself, it has to come out of after-tax income. The basic free market principle is that an individual spends his own money and decides what he wants to buy. That's not the free market principle you now have in health. People aren't spending their own money, the employer is spending it. What I think would be a major step toward a free market system would be the so-called medi-save accounts, whereby you'd retain this tax gimmick, but have the employer put the money in an account in an individual's own name and he or she would be responsible himself for purchasing his medical care. And then that would enable free market principles to work.

We've had socialized medicine in Germany, in Sweden, in Britain, in Canada. All of these countries are having difficulty with it. There's not one of them that doesn't have long waiting periods, in which expenses have not been going up, in which you don't have a real problem. So we're not going to solve our medical problems by socializing.

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